Pros and cons of Germany's trade surplus

Thursday, June 09, 2016 - 01:34

German imports unexpectedly fell in April while exports were unchanged, propelling the trade surplus of Europe's biggest economy to a fresh monthly record despite weaker demand from emerging markets such as China. Sonia Legg reports

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It's the good news that's bad - for some anyway.
Germany's trade surplus hit a new monthly record in April - imports fell while exports were unchanged.
Europe's biggest economy is coping well it seems with a slowdown in China.
But what about everyone else?
(SOUNDBITE) (English) JANE FOLEY, SENIOR CURRENCY STRATEGIST, RABOBANK, SAYING:
"Germany is one of these countries that can afford to spend more. If they did then obviously that would help the exports of a number of other countries."
For years the IMF and the OECD have urged Germany to step up public and private investment in infrastructure and reduce its current account surplus.
It's doing its bit by accommodating record numbers of refugees.
But France and the U.S. - among others - also want Germany to boost domestic demand.
(SOUNDBITE) (English) JANE FOLEY, SENIOR CURRENCY STRATEGIST, RABOBANK, SAYING:
"There is still this concern within Germany that domestic demand isn't as strong as it should be. We can see that in the import data and once again I think this is going to underpin those accusations that we often see towards Germany that they are not doing enough."
There are doubts about whether Germany can maintain its surprisingly strong start to the year.
And the 0.7 percent growth seen in the first quarter is expected to slow.
But a new German study may fuel concerns about economic imbalances.
It shows wealth disparity in the euro zone is increasing.
Rising property prices helped Germans get richer by 7 percent at the end of 2015.
That's twice the rate of Italy and Spain, in contrast Greeks saw their wealth fall by 4 percent.

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